True/False
Indicate whether the statement is true or
false.
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1.
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Economics is the study of how goods and services are produced, distributed, and
used.
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2.
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Both individuals and governments face the same kinds of economic choices.
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3.
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The circular flow of goods, services, and money takes place between individuals
and the government.
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4.
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In a free economy, market prices rise and fall according to supply and
demand.
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5.
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In a market, monopolies help to keep prices down.
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6.
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In a centrally planned economy, citizens have a major role in economic decision
making.
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7.
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In a free enterprise economy, consumer choices influence the types of goods and
services produced and consumed.
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8.
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In a free enterprise economy, high unemployment contributes to inflation.
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9.
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A continual expansion of economic growth is typical of a free enterprise
economy.
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10.
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A depression is a severe recession marked by stagnant business activity.
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Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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11.
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Meeting the needs of people and nations from what is available leads to the
economic activity called
a. | competition. | b. | consumption. | c. | management. | d. | production. |
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12.
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The process of using goods and services that have been produced is called
a. | production. | b. | deficit. | c. | consumption. | d. | management. |
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13.
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Natural resources are one factor of production. The other three are
a. | soil, water, and mineral deposits. | b. | labor, capital, and
management. | c. | tools, machines, and factories. | d. | skill, knowledge, and
entrepreneurship. |
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14.
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A market is created
a. | when workers are hired. | b. | when goods and services are
produced. | c. | when goods and services are bought and sold. | d. | when consumers
utilize products. |
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15.
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The United States economic system is best described as a ____ economy.
a. | centrally planned | b. | traditional | c. | democratic | d. | mixed |
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16.
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Exclusive control over the supply of a product or service is called a
a. | monopoly. | b. | deficit. | c. | recession. | d. | market. |
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17.
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A free enterprise economy goes through normal economic cycles ranging from ____
to ____.
a. | prosperity, recession | b. | recession, depression | c. | surplus,
deficit | d. | inflation, deflation |
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18.
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The following factors contribute to economic growth in the United States,
EXCEPT
a. | a portion of the nation’s resources are used to produce capital
goods. | b. | individuals and businesses must use a portion of their income for savings and
investments. | c. | the nation must use some of its resources on education and
training. | d. | the government must invest all of its resources to produce goods and
services. |
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19.
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Excessive consumer demand, increased energy costs, decreased productivity, and
government spending and deficits may result in
a. | recession. | b. | prosperity. | c. | inflation. | d. | depression. |
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20.
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Individuals in a free enterprise economic system enjoy
a. | prosperity. | b. | economic freedom. | c. | deregulation. | d. | equal rights. |
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Completion
Complete each statement.
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21.
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____________________ resources are one of the four factors of production.
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22.
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____________________ assume the risk of operating a business.
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23.
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Buying concert tickets and eating at a restaurant are examples of
____________________.
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24.
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____________________ is the amount of goods or services available for
sale.
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25.
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The willingness of consumers to pay for goods and services is called
____________________.
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26.
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If Naomi owns the only taxi in town, she has a ____________________ on taxi
service.
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27.
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A period of expanding economic growth is called ____________________.
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28.
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A ____________________ is a downturn in the economy.
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29.
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A ____________________ is a severe recession.
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30.
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When you spend more than you take in, you experience a
____________________.
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Short Answer
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31.
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Briefly describe the difference between a centrally planned economy and a free
enterprise economy.
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32.
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Economists call the former Soviet Union’s economy and the United
States’ economy a mixed economy. Describe a mixed economy.
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